RBI’s proposed write-down of Yes Bank’s perpetual bonds has grave implications for India’s ailing financial system. The country can’t be seen as indifferent to creditor obligations. It couldn’t have come at a worse time — just when India is making efforts to quickly expand its small bond market and tap international debt markets through a larger presence in global bond indices.

Rana Kapoor, the founder of Yes Bank, was arrested by the Enforcement Directorate over accusations of money laundering in Mumbai on March 8, 2020.

It’s short-sighted, even suicidal. The Reserve Bank of India’s (RBI) proposed complete write-down of Yes Bank’s perpetual or Additional Tier -1 (AT1) bonds may be a body blow for India’s ailing financial sector. After all, if institutions with big balance sheets fail to honour their commitments, the creditworthiness of the country itself takes a knock. The development has

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is on the rise and asset classes are migrating towards safer havens, it would be suicidal to proclaim to the world that an institution has failed to honour its debt obligations, that too an entity whose business runs on trust and relationships. It otherwise poses undesirable systemic consequences. ( Graphics by Sadhana Saxena; research support by Rochelle Britto)

It’s short-sighted, even suicidal. The Reserve Bank of India’s (RBI) proposed complete write-down of Yes Bank’s perpetual or Additional Tier -1 (AT1) bonds may be a body blow for India’s ailing financial sector. After all, if institutions with big balance sheets fail to honour their commitments, the creditworthiness of the country itself takes a knock. The development has

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is on the rise and asset classes are migrating towards safer havens, it would be suicidal to proclaim to the world that an institution has failed to honour its debt obligations, that too an entity whose business runs on trust and relationships. It otherwise poses undesirable systemic consequences. ( Graphics by Sadhana Saxena; research support by Rochelle Britto)

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